“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)


"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat


Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput


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Friday, April 4, 2014

"Disappointing" Payrolls Number Spurs Gold Buying

And the number of new jobs created for the month of March is... drum roll please... Disappointing. With the market looking for something north of 200K, it didn't get it. Up started the talk of a halt to any interest rate rise next year.

And with that, gold was off to the races as back down went interest rates with buyers coming back into the Treasury markets. The yield on the Ten Year note fell to 2.737% as I type these comments.

For me, it is really a rather simple concept - gold will move north as US interest rates move south and gold will move south as US interest rates move north. That, for the immediate moment, is what is driving the gold price even more so than the actual movements of the US Dollar.

The Dollar was initially weaker on the employment number news but after traders began attempting to decipher exactly what ECB President Draghi was saying about the lack of inflation pressures over there and the possibility of the ECB's own version of Quantitative Easing, the Euro came under some pressure. That floated the Dollar a bit higher against the Euro but it is basically sitting here doing nothing at the moment.

The strength in the forex markets was more among the Yen ( here we go with that safe haven trade again???) and the Canadian Dollar. The Aussie was also higher. Traders seem to have mixed feelings about the greenback with some yapping about the employment numbers, while disappointing, were not that bad. What to take away from all this? - more uncertainty as once again each piece of economic data will dictate the day to day price action across so many of these markets. There is just not much in the way of conviction.

This is what we get when we have near constant interference from Central Bankers. I have said it in the past and will say so again, the source of so much of the wild volatility we are seeing in the market place these days is Central Bank activity. When the investment/trading world spends most of its time parsing statements from Central Bankers rather than studying real world fundamentals, the result is extreme sensitivity to comments from these monetary masters. Then again, trying to understand the fundamentals in an economic world created by Central Bank actions ( QE/bond buying programs) or government stimulus programs ( think China) is at times an exercise in futility.

Another side note, the much respected analytic firm Economic Cycle Research Institute released their US future inflation gauge numbers this morning. It showed a decline to 103.1 in March from a 104.4 reading in February. Interpretation? There are no concerns about inflation pressures. This is what makes me expect any rallies in gold to attract selling pressure.

Back to the jobs number and the impact on the gold price in today's session. Gold is currently trading up 1.6% at $1305 as I type this. It has surged through psychological resistance at the $1300 and recaptured that handle. Of course, do not look for any talk about manipulation of its price today even though a small drop in interest rates in the US and a weak but relatively stable Dollar hardly justifies a move of this extent in the yellow metal. A short covering rally due to nervous weak-handed bears is pretty exciting but a key factor for SUSTAINED higher gold prices is whether or not NEW LONGS/BULLS want to commit in size to this market. So far that has not been the case. These occasional short covering rallies are exciting and stir up the "gold is going to the moon" talk every single time they occur but as we have seen, they do not tend to last.

Only if gold can generate more new buying than short covering does it have a chance at starting any kind of sustained uptrend. It is still a traders' market and that means short-term oriented guys can work this market and take advantage of the price swings but beyond that, extrapolating about lofty upside price targets is premature in my view.

Incidentally, I am sure most of the readers have seen or are aware of all the chatter about the HFT crowd as a result of that "60 Minutes" interview last Sunday and the subsequent dust up we have all had the pleasure of watching over at CNBC.

Many in the GIAMATT crowd ( Gold is Always Manipulated All The Time) have seized about this story to justify their contention that gold is a rigged market just like they have been saying for many years.

Here is the problem with that rationale - on the surface, yes, it looks like they have been vindicated. But this is important - it is a FAR, FAR cry to rightly discuss the impact from the HFT crowd, a crowd which I feel has no useful purpose whatsoever in our markets other than, like ticks, to suck the juices out of the host and enrich themselves in the process - than - to draw the illogical conclusion that therefore the gold price is rigged by the US government and the Fed and Treasury.

After all, the claim is that every single stupidly named "flash crash" lower in gold is the result of nefarious government forces colluding to artificially shove the price of gold lower and prop up the US Dollar. But, these folks, some of whom I count as friends, always point to the BULLION BANKS, the JP Morgans, the Goldman Sachs, etc. as the forces suppressing the gold price at the behest of the feds. In their mind, they, not the HFT crowd, are the enemy of all common decency. They are the evil market riggers.

The report about market rigging that is currently the talk of trading town is the High Frequency Traders doing their thing, not the bullion banks, but proprietary funds especially those front running orders and getting an unfair advantage in the markets.

I wanted to go on record about that because it seems to me that one cannot have it both ways. Here it is in a logical form:

PREMISE: The gold market is manipulated by the government using their proxies, the bullion banks, especially JP Morgan and Goldman Sachs to regularly "bomb" the gold market lower and artificially suppress the price.

AXIOM: The HFT funds engage in activities that involve front running orders coming into the electronic pit and skimming pennies out of every market and doing so thousands of times over and over again.

CONCLUSION or INFERENCE: Gold is manipulated by the federal government.

Do you see the fallacy in this argument being made by the GIAMATT crowd?

Now, if you want to talk about gold prices getting slammed lower by big orders coming in from hedge fund computers, which do not employ, scale up or scale down tactics but rather are seemingly all in or all out, then we can talk about that but to infer a manipulated gold price based on well-needed exposure of HFT activity is a big stretch. It's more faith than logic.

Back to the charts however...



Notice that gold bounced right near the critical $1280 level. It needed to hold there to prevent a much sharper fall and it has done so. That is what has spooked some of the shorts and why they are furiously covering. At this point, the market is maintaining its strength of the day and looks poised to end up near the session highs ( that could obviously change ) but if it can hold above $1300 to end the week, the bulls will have dodged a bullet and can thank that disappointing payrolls number for bailing them out.

Going into next week, with this strong close, it should set up a test for the next resistance level WITHIN THIS BROAD TRADING RANGE near the $1320 level.

The ADX remains heading lower, again, revealing the lack of a definitive trend in this sideways moving market. While bears recently were able to seize control within this range, the +DMI is threatening an upside crossover of the -DMI signaling the bulls might be back in the driver's seat for a while. Back and forth we go.

More later as time permits...

46 comments:

  1. Thanks Dan.
    Some folks have made an art form out of having it both ways and then tell you how right they were because they can always point to a C&P'd sentence archived somewhere because over time they've "predicted" an almost infinite amount of scenario's they can reference.

    The whole good/evil aspect and blame game on powerful forces and organizations all the time is a scapegoat tactic that puts the focus on someone else always being responsible when price predictions or sentiments don't pan out. It's and easy out and it allows them to escape being wrong.
    Your description of the twisted thinking or rationale is exactly what I referred to two days ago as a monological belief system.

    That belief system doesn't allow those who engage in it to recognize it as such. It's far easier to blame or villify an organization or govt etc all the time then it is to sincerely question one's own beliefs. When someone claims to know something with certainty while claiming some insiders view on high level banking or geopolitical issue's it's an indication they're beliefs are monological and/or disingenuous marketing....or they're just wacked.

    Jim Willie and others like him are perfect examples of this. They're never wrong...just victims of the evil one's manipulating events even more then they could imagine.

    Newbs to the gold/silver/manipulation arena should tread carefully when entering that carnival tent of thought. PT Barnum stuff.

    ReplyDelete
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    1. DarkPurpleHaze;

      Yes, indeed it is so much easier to blame some nefarious, evildoers when one's predictions go up in smoke than to accept responsibility for being a nutcake and misleading others in order to peddle newsletters. I have no qualms about those charging fees for newsletters but if they are consistently wrong and off the mark, at some point one would hope that those who are shelling out their hard-earned money for that crap would wise up and stop supporting them. Sadly, they seem to have an audience that is drinking too much of the Kool-Aid and cannot stand back long enough to realize that they are being played for suckers.

      Delete
    2. Perhaps DPD. However, what about the Libor and Forex manipulating which was denied for so long. Is it not possible that the same is happening in the much easier to manipulate gold market?

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    3. One quick look around at some of the current blogosphere article titles this weekend has Kool-Aid dripping right off of them.
      The Alex Jones-like blogs of truth and justice out there will eventually grind their collective axes to a dull point from crying wolf all the time.

      The end is near, in case you didn't hear....and if it isn't then it's clearly manipulation of the present. }:^)














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    4. ps. full derailment and trainwreck in progress in the Land of Fa

      Delete
  2. Thanks Dan. Gold is manipulated by the Feds when it is at high levels and threatens confidence in the dollar. But it may also be manipulated higher in severe deflationary environments. In between these times your hedge fund players are the big drivers of price IMO. The price is still determined in dollars and through the paper shuffling game.

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    1. Bob;

      Thanks for the comments. It is funny that you wrote this because that is exactly what I have been saying for a while but it seems to get lost among those who now believe I have gone over to the dark side because there are times when I am bearish on gold.

      I too believe that when the Dollar was threatening to crack the 72 floor, and gold was rocketing higher, the feds did indeed get involved in working to slow the price rise of gold because it was essentially a vote of no confidence in the US Dollar.
      But I also contend that once the dollar recovered and once the threat of inflation dissipated as viewed through the prism of the commodity indices which were imploding lower ( notably copper), that the feds WERE NOT involved whatsoever in any so-called gold manipulation scheme. Rather it has been hedge fund selling..
      '
      I also agree with you that if gold were to experience a sharp drop lower in price indicating a return of deflationary fears, that the Fed would indeed WELCOME a higher gold price and might actively attempt to try to move it higher, although that would be a tall order if the Dollar were to strengthen at the same time.

      Needless to say, in spite of how many times I have written to make my views on this subject very clear, I still get the usual hate email from the cultists.

      Thanks for a reasoned post. It is a pleasure.

      Delete
  3. Horrific collapse in gold mining shares continues as they are being dumped into the closing bell.

    Everyone is now fleeing for the safety of junk bonds and sovereign debt of every stripe and color.

    Check out JNK and LQD, both at 52-week highs.

    Stocks like Yamana Gold being crushed, sitting at 2-year lows.

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    1. I'm going on the record but i think today was head fake top. I got lucky on shorts but was dead wrong on s&p and dow. We'll see this play out.

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    2. Mark.
      At least get your facts straight. Neither are at 52 week highs. Especially not LQD which is at midpoint. I'll conceded that JNK is near its high though.

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  4. Dan,

    I think we are starting to see institutional money enter the gold market. Who knows there maybe one more big drop but I think compared to other asset classes from a long term perspective gold is relatively cheap and there really isn't a better alternative. I hate the "gold is always manipulated crowd" as well bc I think that it dropped due to a technical break. Gold is showing signs of stabilization and I think that given the current situation of the world and central banks, gold and gold miners will do well this year.

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  5. Mark, where did you see this dumping of gold mining stocks and the crushing of Yamana gold which was actually up nearly 1% on the day!!!! I made 6% on El Dorado today and that is not an example of dumping gold stocks!

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    1. Mark is a person who is no different than mainstream media. Keep pounding incorrect facts with the intention that repetition will eventually sway public perception. I've learned to immediately write off every post he makes. He is obviously very bitter and I'm guessing he lost his entire 401(k) to gold mining stocks. He rode them on the way up but didn't know when the hope off the train.

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    2. Some of the miners I picked up last July like SMF Semafo are up 250-300%%..nice pass so far.

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    3. Wow! Got It Wrong, you are our hero. One wonders why you even waste your precious time with us when you are so good at calling tops and bottoms in mining shares.

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  6. Having read your blog and listened for sometime via KWN I respect and value your trading views. However your constant anti gold bug stance is almost as dogmatic as the gold bug purveyors themselves. We know markets are rigged, libor, energy, fx, aluminium warehousing, plunge protection and open market ops by the FED. We know banksters are corrupt, corzine, London Whale, the Frenchman Servier , UBS etc. We know the ratio of metals traded to physical production is way off the scale and even the COMEX reports have disclaimers on. We have read the Central bank memos from GATA re. Controlling the gold price. It is common knowledge thst shorting at the London open and going long metals at the close of the western market is a profitable trade and yet you still refuse to entertain the notion of market rigging in the metals whether up or down and by tptb or their agents. Unfortunately you do seem wilfully blind to intervention in the metals with the intention of controlling price.

    Tell me, if the US is prepared to go to war to protect the USD why do you find it so hard to accept rigging of pgms to achieve the same objective?

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    1. Jasa;

      see my response to Bob above if you want to know my view on this topic. Personally I am both disgusted and repelled by those within the gold bug community who are constantly making one outlandish prediction about the gold price and then blaming the non-fulfillment of their fantasy on some evil price manipulators as if that someone excuses them for their wild ravings.

      My business is about making money IN THE MARKETS as they are, not complaining about why something is not doing what I insist it should do like far too many of these hucksters.

      If that offends you, so be it.

      Delete
    2. It really amazes me how many people try to needle Trader Dan. He is a beacon of light in a world full of mental midgets and hucksters. These permabull Gold Bugs have lost any sense of objectivism with this constant propaganda that the sky is falling and the powers that be are cheating them even after their bogus insight proves fantasy. The dollar is the only game in town my friends. As the Euro starts to break to the downside this year lets see just how far gold moves down priced in those so called worthless greenbacks. Eventually the dollar will break 72 but not now. There is a time to buy and a time to sell and right now isn't the time to buy gold, silver, or mining shares. New lows are coming so just wait for a better price and quit listening to the fools. Don't let these ring tail chimpanzees get you down Dan you are a hero to many of us!!

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    3. john, you are just as dogmatic as the permabulls by promising new lows in gold.
      I don't remember Dan promising new lows in gold.
      Actually (and fortunately), I don't remember him promising anything :)

      Delete
    4. Hubert, you want to the through me in with the hucksters because I think the Euro is going to break to the downside? I'm dogmatic because 57.6% of the trade weight of the dollar is the Euro? I didn't promise anything my friend it's just my opinion. Dan's opinion is worth five of mine anyways.

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    5. Hubert and John;

      I am enjoying reading your back and forth as it is respectful in tone.

      Keep in mind one important thing - opinions ( including mine) are like armpits - everyone has them and they all stink! The only thing that matters to traders is the opinion of the market that they are trading. If we can learn to get that right ( even if we think it is wrong) we can either profit or at the very least, not get hurt too badly! Sometimes the latter is more important than the former!

      Good trading to you both.

      Just for some FYI, I think the Euro is also headed lower although when it comes to the Forex markets of late, they have been producing some stomach wrecking moves. I guess that is why many traders keep a packet of Tums by the monitor! Seriously, if, and this is a big if, the ECB were to start up their own version of more QE at the same time the Fed were to taper, it should, in a normal world, tend to put pressure on the Euro at the expense of the Dollar because of the interest rate differential.

      I am not being dogmatic about it however because I have been burned so many times on trades in the forex arena the last few years as these unexpected events would crop up, but at least we can watch the charts and maybe, just maybe, make a few bucks off of it. Or in the case of our friend Hubert, some Euros! then again, Hubert, France would probably be better off if you still had the old French Franc.

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    6. "Seriously, if, and this is a big if, the ECB were to start up their own version of more QE at the same time the Fed were to taper, it should, in a normal world, tend to put pressure on the Euro at the expense of the Dollar because of the interest rate differential."

      Dan, I guess great minds think alike. I sure hope we are right because the metals especially silver will be on the cheap and I will be ready to gobble it up.

      Delete
  7. This comment has been removed by the author.

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  8. Not offensive Dan, just unnecessary imho. As you often opine, the price action is all that matters from a trading perspective, needing to deal with what is happening in front of you rather than being wrong for 3 years or more and constantly promising jam tomorrow. Read your comment to Bob above and understand where you are coming from, its just that the poor suckers who did not understand about hedging have been battered enough and surely are now the contrarian trade? Hard to find much bullish sentiment about gold/silver in the investing public in my experience no matter what the hucksters say. Thanks for your response and valuable work on this blog and no matter what my personal views are I do attempt to listen to your message with an objective mindset.

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    1. This comment has been removed by the author.

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    2. jasa;

      I understand completely where you are coming from. Yes, a good, many people have been hurt quite badly with gold/silver investments over the last few years.

      When QE first was unleashed, they, along with myself, just knew that gold had to go higher because of the vast sums of money being created by the Fed. It did just that scoring a print well above $1900. Silver of course was sitting near $50.

      Then, something happened which caught a lot of us off guard, the expected continued fall in the US Dollar did not happen. Instead, we had that European Sovereign Debt crisis which hit the Euro and sent it reeling, particularly at the expense of the Dollar as well as Abenomics in Japan, and suddenly, the Dollar began heading the other way from what we expected it would do with the Fed's funny money creation program.

      In effect, what we learned, was that unless these vast sums of money being created actually make it into the broader economy in the form of new debt by both business and consumers, the economy will not heat up like we expected. The money was going into equities as many banks were not lending, in spite of the wishes of the Fed.

      That was when I started looking at the Velocity of Money and noticed it continued to fall. Suddenly it began to make sense ( in a sort of perverse way) that commodity prices were going to continue to fall and thus undercut the "buy things tangible" argument that had been in vogue for the previous years.

      Once gold then broke down below $1530 support, that was all she wrote.

      What to take away from all this? We all have our own experience and theories/opinions/views that we are using when we make our investment decisions. That is normal. If the market however DOES NOT CONFIRM those, even if we do not quite understand it, it is best not to argue with the market and simply stand aside, get out or go the opposite direction and with the market.

      That is the same stuff with the stock market. Frankly, I think stocks are ridiculously expensive given the crappy economy. the deal is that the market still must feel that they are cheap. That and the fact that where else can big firms put money to work to obtain the kinds of yields that they need to retain their investing clients.

      so until the market shows that it has topped, you cannot fight it. One can move in and out on a short term basis but being short stocks over the last couple of years has been as bad as being long gold.

      Let's just say we are all learning but some of these lessons can be incredibly expensive. That is the part that sucks.

      Delete
  9. John your views on the USD sound like regurgitated Armstrong to me and reveal just as closed a mind as the goldbug. It is not about needling Dan. You have no idea whichway things will pan out, but have to look at what is going on on the screen. There is a difference between trading and investing, and one has to be careful to try and remain balanced even if faced with buckets of spite and vitriol on a daily basis. After all did you disagree with any of my comments about the market corruption? Just ask yourself how many of the proven frauds have resulted in jail time? Publishing opinions is one thing, kicking those who are already down and trapped is another. I have read Dan and listened to his broadcasts for years and I know his ire is directed at those snake oil salesmen promising 50k gold tomorrow however there are many good people hoping for some bullish relief. They are not hustlers just Joe Public who bought silver at $40 because the financial world was headed to hell in a hand basket. Who was to know the FED would bail out the world? Such guys have had plenty of kicking and battering already I can assure you from personal experience and they are disgusted beyond belief at the proven corruption. They are also now trapped investors but were never ever traders, however I do not gleefully regard them with disdain as you seem to but rather sympathise and just remind them that everthing moves in cycles and to keep future position sizes small and diversified. Good luck in your trading all.

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    1. Jasa, apparently my words defending Dan hit you on the chin. If I'm parroting Martin Armstrong then I must be partially literate. I try to be objective but mostly skeptical questioning everything. I agree that the world is one giant crooked snake when it comes to politics and finance. What I think most people fail to realize is that it's not just the US government and US banks causing these problems it's on a global scale. Having the reserve currency makes the dollar the go to safe haven when we have major problems.. If you think that the dollar is in trouble try looking at the other fiat currencies around the globe and please explain to me how they are any better. Although I feel apathy for people that bought the metals and mining shares at the highs listening to the hucksters, it doesn't change my view of reality. The world is corrupt because man is corrupt. That doesn't mean that every trade that the gold bulls make is being cheated lower on every down day like the hucksters at KWN proclaim does it? I never heard them crying manipulation when silver when parabolic on the way up towards 50.00, but it's been manipulated all the way down eh? I wasn't attacking you personally with my reply it was for all of the Trader Dan haters my friend.

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  10. John, The USD is the only game in town!!

    Current government debt in the US is over 17.5 trillion and is rising by an average 2.7 billion per day. Estimates are that it will hit 23 Trillion in the next 5 years and that dose not include the unfunded debt! As a percentage of GDP that is just over 100% and only Japan and Italy have a worse debt to GDP ratio.

    At what point does everyone wake up and realise that something has to give.

    I am not a gold bug, but I do take a cockroach approach to investing as I can see big corrections ahead. No idea when, could be next week or next year, but unless you are a trader then a balanced approach has to be the answer including holding some gold and silver when appropriate. The worlds governments are pretty much out of control and just lining their own pockets. This week we had a UK politician who made a tax free profit of £1.4 million on a house funded by the tax payer that her parents lived in. Originally she was told to pay back £50,000 of the interest payments she claimed on the loan, but a group of fellow MP's reduced that to £5000!!! They see no problem with that. Tony Blair is now worth over £70 million most of it made since he became PM. That is why they cannot stop the banks etc as they are all in too deep now and it will end badly as it always has throughout history.

    Having any kind of dogmatic approach to any investment group will usually end in tears. I read Dan's blog as it provides a balance to the other more pro-gold blogs and websites, but the others provide some good information as well. Jesse's blog being another good website. Take in all the views you can and then make a decision.

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    1. David Booman;

      Thanks for a good post. That was really informative. Yes indeed, the system is so corrupt. It is a tragedy that so few of our political leaders are men/women of incorruptible character. We live in an age of complete self-centeredness.'

      I agree with you on holding physical gold/silver as a sort of hedge/insurance policy against these runamok spenders and Central Bankers. I do not think any serious investor who looks at the situation in so many nations around the globe, whether that be the US, the nations in the Eurozone, Japan and even China, would not want to own some physical metal in their portfolio.

      It does not take that much gold to have a decent insurance policy. That way if the worst does indeed happen, you are protected to a certain extent. If the worst gets postponed, like is currently happening, you can then employ your other assets into those sectors which are currently in favor by the big funds and other institutional investment funds which are the real drivers of our markets anyway.

      This is not an easy profession even for professionals. The little guy however can at least learn to read the charts and hopefully decipher where to commit his/her precious resources to protect their family and provide for them. After all, that is what we are all hopefully trying to do.

      Personally, I wish the Central Bankers would all just go away and leave us and the markets the hell alone but that is a pipe dream of mine!

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    2. "John, The USD is the only game in town!! "

      David, please let me explain my reasoning. I think that the days of the petro-dollar are numbered. I agree that the USA will never be able to pay backs it's debts and that the living standards of Americans will erode away once the dollar losses it's reserve status. However, until that event occurs the dollar will continue to enjoy safe haven money flows during major panics because it is the reserve currency making it the only game in town. We are living in the good times right now in the US and I really feel bad for the youth in this country because they will suffer like no generation before them when it comes to their loss of liberty and ability to better themselves trying to survive under the thumb of Marxism and compete against giant monopolist international corporations which is impossible for the little guy. I wish I knew the answers on how to fix things but I don't. If more people learned who Buckminster Fuller was we would be off to a good start I think.

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    3. Hi John,
      Bucky was a genius and I studied his work for many years. Was lucky to meet him a few times and heard him speak many times.
      You are right, but over the years I've seen the problem with a couple of Bucky's views He thought that if through invention we could raise the standard of living for everyone, the world would become a better place.

      What he seemed to miss are the fanatics around the world that don't care about anything, even their own lives, or what the world has in the way of physical wealth. They are extremists who's main objective is to punish anyone that does not agree with their views. It only seems to take a handful of them willing to bomb anyone in their path to make the world so much worse off.

      But please let me make it clear that Bucky had a beautiful vision and I still think of his teaching very often and how they can help me in my own life.

      He was an incredibly kind man!
      Steins

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  11. Jasa -

    Lets take you point by point.

    You wrote: Dan has constant anti gold bug stance is almost as dogmatic as the gold bug purveyors themselves."

    No, Dan played the market up pre 2012 money movement. He followed the money/hedge funds. And probably made a lot of money.

    When the hedge funds went net short - Dan went net short, and I am guessing probably made money to this day on the short side of gold. Probably a no brainer.

    Lets look at the fundamentals - not just Dan reading charts for us. Dan keeps on harping on the lack of velocity of money. Dan also wrote about looking at jobs. Are people getting raises? Are the costs of living going up? So how does that affect the velocity of money? is that bullish for gold? Dan is just stating the obvious. And he writes the same thing post after post.

    Lets look at China. As Dan has pointed out, you have to look at the Chinese and where they see the floor on gold. Dan is not going to give you all of his secrets. But if you do your research about China, China inflation, and structural issues, it may just provide some clues where gold is going.

    As for rigging, manipulation, theft and other issues - I should not speak for Dan. But I imagine Dan would not mind if the head people of MF Global were pounded with a wooden mallet in a certain region of the body without anesthesia.

    As for the other manipulation. It should not affect you investing. Yes, interest rates are low due to QE. Where is the money going - its going to stocks. Not to gold. Why should it go to gold? We are in an environment that is not conducive to gold. Look at Jim Sinclair's 5 pillars of gold.

    Why should it go to stocks? Because in an environment of low interest rates - and monetary stimulus - it finds its way to the stock market, even matching up to the balance sheet of the US. Even Hussman who hates the value of the stock market admits that margins for US companies have never been higher. And many of these companies are buying up their own stock and issuing debt.
    So - if you know anything about investing - putting money in stocks was the place to be.

    Now lets look at gold, now. The us may or may not taper. I am in the taper camp. They are going to do it. Europe has serious problems, they will have to come out with QE of their own. So Europe will probably take over for the US. Japan will probably print at a greater rate with all of their problems. So that is Dollar positive.

    I am only using common sense. No armstrong, no Dan Norcini. With that information - on a short term fundamental view - why would anyone want to be long gold as the dollar goes up, other than a value play.

    Diversification - I agree with you. You need insurance in gold.

    But manipulating gold so it deviates more than $20 here in the US. I do not buy it. If gold was so mis priced - don't you think people would buy all the physical up?

    The problem with gold is that sometimes it acts like a commodity - look at coffee and sugar. And other times it acts like a currency - look at Russia in Crimeria (sp?). You can not control the gold price in a fiat world, unless if you want to raise interest rates or lower interest rates as Dan said.

    As for going to war with others who affect the US dollar - its all about politics and slowly, slowly, slowly debasing the dollar.

    I am sure that I can write a lot more - but you guys are biting the hand that feeds you!!!! and that makes me mad. Just like Dan left KWN. He can leave this website in an instant. He is giving back to people. He has been able to make a decent living doing this for so many years. And he wants to educate others how not to be taken.

    Do not bite the hand that feed you.

    Dan - I apologize if I have misrepresented you in any way.

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    1. jmsvett;

      Thank you for such a kind defense. Wow! I am going to run for political office now and make you my chief speech writer!

      Seriously, I really do hope that some folks are learning things to protect their investments and understand the markets a bit better. They are very challenging to say the least and one cannot afford to be too rigid and unable to look at things objectively if they hope to survive in them.

      Thanks again!

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    2. Jmsvett.....great post, couldn't agree more...especially the US taper part and the EU eventually taking the QE(U) baton from the US as the current Fed taper winds down.

      Japan meanwhile is doing the heavy lifting and monetizing like crazy and I believe has started down a semi-hyperinflationary path while certain aspects of their economy (wages) experience deflationary pressure.

      Everyone here is fortunate that TD has this blog available to all of us for free and that he's not driven by marketing/bottomline considerations. Integrity is important.

      Delete
    3. Count me as one who is learning from your blog. Thanks again.

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  12. Jmsvett,
    Everything you talk about is what has happened so nothing to quibble about. I do see the stock market showing signs of some real potential problems. The drop in all the hot money stocks is going to discourage investment. The last week was very scary if you hold biotechs, FB, Yelp, Netflix etc. It resembled a panic. So to think the stockmarket will be a bastion for money to go is very much in question. I am not saying gold will benefit by the way, it may be months before it does. The stockmarket without some fed intervention or some controlling force is in trouble. I bet you already know that, if the S&P falls below 1850 or so it will quite a correction or even collapse. Just my opinon.

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    1. Concord;

      I hear ya my friend... every time I have said the same thing the last couple of years, these equities have proceeded to make a complete fool out of me and out I have been forced from my short positions.
      Maybe, this time we are seeing some signs of a real top but as many times that I have tried to play this thing from the short side and been burned, I am going to be cautious.

      I think the big thing will continue to be the interest rate outlook. As long as Mr. Market thinks that low interest rates are here for the foreseeable future, stocks should find support on selloffs. If however, the market begins to fear higher interest rates coming sooner rather than later, then I think we are going to see more chinks in the armor of the perma equity bulls.

      Hard to say right now... I am trying to remain open-minded about it and flexible - very flexible...

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    2. Nobody really knows, but be careful Concord. I honestly think we go up significantly this year and next (10% plus returns). I think the fed wants a correction here, to shake the market. Talk about manipulation :). My gut tells me commodities have a lot of downside left. Hypothetically, if oil drops to $75 - $80, that is a 20% cost reduction in a company's p&l - that helps earnings. Give a point or more in price earnings and there is still room for improvement. We are below valuations for 2000-2001.

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  13. Jmsvett,
    One thing I have learned after being lulled into a fall sense of security in the gold market was I know nothing when it comes down to it. Yes the market could go higher, and if the fed wants a correction and for some reason loses control I am not sure it is so easy to take the average investor and expect he will rush back in. So they better get this market back on track soon.

    By the way I hope you are right as I have money in all the sectors getting savaged. FB, biotech and growth names. Not feeling too good after Thursday and Friday it was scary.

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  14. Hi Dan, it occurred to me that maybe some folks are confusing a Bear Market Raid with manipulation.
    It might be helpful for you to address the differences to help some of those that may be confusing the two.
    The combination of a bear market raid and HFT trading could lead to a deadly combination these days!
    Thanks, Steins

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  15. So many bears so little pie left

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  16. Thanks Dan and John for the replies.

    Okay John I see the point you are making and that is pretty much where I can see it going as well.

    Dan, yes it is a real shame that the corruption has got out of hand now and is being led by the politicians from all over the world. They think they are entitled to dip their hands in the sweet jar whenever they like and pass gifts of public money to their friends. Take the recent Royal Mail flotation in the UK. It was under-priced and then we find out that 70% of the shares were allocated to the banks arranging the sale. In addition one hedge fund made £36 million on the sale of RM shares and strangely the best man at George Osborne's wedding is on the managing board! You could not make it up.

    By the way you may have guessed based on my posting times that I am from the UK. I have been involved in the investment industry in various forms for around 28 years and had my first experience of a market crash in 1987 a few days after I had joined an investment brokerage!. It was a good learning curve. Been through a few more since then having worked for AON in the UK for many years although I am now retired. I expect I will see a few more yet.

    Anyway good to read the sensible posts on here and thanks for all the information.

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  17. Jmsvett thanks for your detailed response some of which I can agree with some I can take issue with. However taking an adverse view contributes to general understanding. Otherwise this blog would simply be sycophantic like many others are. Always challenge.

    I would certainly question your assertion that people would buy up an under priced commodity. Many cannot even recognise physical precious metals never mind understand their potential value and usage. Also 99.9% will never buy at the lows or short/ sell at the highs of ANYTHING in my view, lucky if you catch the majority of any move.

    I agree with your comments about war and the USD, same could be said for inflation, but think you are missing the connection about USD gold. Dan often states that gold is the anti dollar, it seems ridiculous not to assume that central banks have colluded over control of an asset that strikes directly at their control of their financial power.In fact they would be idiotic not to. I agree that $20 here and there is hedge fund territory but controlling the trend and inflection points is definitely in the purvey of tptb in my view.

    Dan is railing against hucksters, but GATA provide documentary proof for their basic premise and meanwhile govt control over bank accounts and money is increasingly invasive. It is foolhardy not to take some steps to protect you and yours and to believe the worst of your elected or unelected elite.

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    1. Hi jass -

      I actually believe that central banks are adversaries, looking out for their sovereign interests.

      Gold to me is only an insurance policy.

      I actually believe that the us is going to experience growth, and will only print enough to get through hard times, or non growth. We are in better shape when it comes to growth.

      I also believe the leverage started during the Reagan era. I believe that the Dow will eventually fall to 4000 or less, and there is nothing the fed can do.

      Grata, to me, probably has documented cases of manipulation, but I do not think it affects investors, but could be ruinous to traders who don't know what they are doing.

      I hope this helps understanding some views that are opposite. But as you say it's good to have a difference of opinion.

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  18. Buongiorno Dan:
    I feel I am a fairly smart guy but quite a dummy when it comes to the futurs market. Can you explain this for DUMMIES ( since I feel it is impportant to my understanding of the sequence) :
    "
    Guess what - April gold was entering its delivery period and many traders who were SPREAD using that month lifted their spreads.

    The total number of spreads lifted was - are you ready for this? - 51,299 contracts ( futures and options combined). As you can see, that outnumbers the amount of actual buying and selling of outright positions by more than 3:1.

    "

    What does " lifting spreads " mean ?

    Wolf, seeking to become Wiser

    ReplyDelete

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